Customers bitten after paying by plastic, First American says

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Illinois' First American Bank is advising folks in Chicago to pay their taxi fares in cash rather than by card – amid allegations of a computer security breach in the payment processing chain used by cabbies.

It is not clear exactly where or how debit or credit card details are allegedly being copied and siphoned off to crooks. But we're told the bank noticed a pattern of fraudulent spending on victims' cards after they were swiped through terminals in some cabs: more than 220 cards have been canceled as a precaution, and more than 11 debit accounts have reported fraudulent activity.

In a letter alerting its customers of the alleged breach, which was obtained by investigative journo Brian Krebs, the bank claimed: "We have become aware of a data breach that occurs when a card is used in Chicago taxis, including American United, Checker, Yellow, and Blue Diamond and others that utilize Taxi Affiliation Services and Dispatch Taxi to process card transactions.

"Until the situation is rectified, we will continue to close and reissue cards that have been exposed. This interruption of card services has inconvenienced our customers while they wait for a new card."

First American Bank, which operates in the state of Illinois, said it has filed complaints with the city of Chicago, and urged MasterCard and Bank of America Merchant Services to stop processing cards for cabs as a precaution.

But First American claims that despite requests for help, Bank of America has "not shared information about their actions and appear to not have stopped the breach."

In a statement to The Register, a spokesman for Bank of America Merchant Services said it is still in the process of probing the matter, but had yet to find any evidence of device hacking or wrongdoing.

"Bank of America Merchant Services takes allegations of data security matters very seriously and follows all industry rules and legal mandates to investigate issues. We continue to work and cooperate with our industry partners on this investigation," the company said in its statement.

"At this stage of the investigation, it has not been determined that a data breach of a merchant or any of our systems has occurred."

Meanwhile, MasterCard spokesman James Issokson told Krebs that MasterCard is “aware of and investigating reports of a potential breach affecting taxi cabs in Chicago.” ®